Digging into GroceryCHOICE

Earlier this week, South Australian senator Nick Xenophon raised concerns that the Government’s FuelWatch scheme would lead to higher petrol prices and that small independent petrol retailers were likely to be disadvantaged by the scheme. So it looks likely that the FuelWatch legislation will fail to pass the senate and then fade into oblivion. I can’t say I’m too upset about this as I have been critical of the scheme. Furthermore, falling oil prices have led to a fall of around 20 cents/litre in petrol prices which takes much of the sting out of the issue.

So now I am free to turn my attention to another Australian Government initiative, GroceryCHOICE**. This scheme aims to “[help] consumers find the cheapest supermarket chain in their area without having to compare hundreds of prices”. Every month a survey is conducted of prices on around 500 different grocery items at over 600 supermarkets around the region. These prices are aggregated into “baskets” of goods in the following categories:

Meat & Seafood

Fruit & Vegetables

Dairy

Breads & Cereals

Drinks & Other Snacks

General Groceries

Household & Personal Care

There is also a “Basic Staples” basket, which includes some items from each of the more specific baskets. Prices of these baskets are averaged across 61 regions around the country and reported on the site for each of the major retail chains.

Italy has introduced a similar scheme, which allows consumers to receive text messages giving them prices around the country for specific items. Unfortunately, the Australian scheme only provides prices for baskets not individual products (supposedly “to prevent the manipulation of the price survey”, but this doesn’t seem to worry the Italian Government), so for an Inner West shopper like myself, if I am interested in tomatoes, this is what I can learn from GroceryCHOICE:

Retailer

Fruit & Vegetable Basket

Coles/BI-LO

$25.05

Woolworths/Safeway

$24.63

Franklins

$25.70

Independents

$27.34

So, while I can save 42 cents by shopping at Woolworths rather than Coles, that’s only if I buy an unspecified selection of fruit and vegetables (possibly including Brussel Sprouts, which I would be prepared to pay not to eat). So, GroceryCHOICE would not seem to be very useful for me. Not only that, while the Italian service explicitly compares prices around the country, the GroceryCHOICE site makes it rather tricky to make regional comparisons.

I took this as a challenge, so I wrote a little script* to extract all the data from the chart and published the results on Swivel. There are separate datasets for the product category baskets and the Basic Staples basket. The data can be easily downloaded, so feel free to explore further!

The results are not too surprising: ALDI is consistently cheaper than all of the other retailers and the independents are the most expensive, as is evident in the chart below.

Average “Basic Staples” Prices

However, first glances can be misleading. For each retailer, these averages are taken across those regions for which prices are available. Since Franklins price data is missing in many of the most expensive regions (such as the Northern Territory), this is an unfair comparison. For example, restricting prices to just the regions where Franklins prices are available brings the Woolworths average price down from $77.57 to $76.26, making it cheaper than Franklins.

Looking at the product category baskets gives us a bit more detail (although ALDI prices are not available for these baskets). The following charts provide a graphical comparison of Woolworths basket prices compared to all of the other retail groups. Blue points represent baskets that are cheaper at Woolworths and red represents baskets that are more expensive at Woolworths.

Grocery Prices: Woolworths versus The Rest

Overall, this comparison makes Woolworths look quite good, but if you are wondering about that outlier where Coles is much cheaper than Woolworths, it is the Fruit and Vegetable basket in North NT. It costs $29.03 at Coles but it will set you back $32.54 at Woolworths, which is an impressive $3.62 mark-up.

To get a sense of the range of prices around Australia, this chart gives the full picture for the Basic Staples basket. It is sorted by the price at Woolworths and I could not help noticing that the cheapest area to shop at Woolworths is Outer Sydney North West. Isn’t that right near head office?

* The script used to scrape the data is available here (choice.pl). Coding tips are welcome!

** UPDATE: since writing this post, the GroceryChoice scheme has been discontinued and the web-site no longer exists.

Your post offers some great insights in the Grocery Choice Initiative. It does seem a little misleading on the government’s part to separate items into baskets, rather than price gauging the individual items. I have to admit, I completely agree with you on not wanting to buy a “basket” containing Brussel sprouts!

And I’m not too familiar with the regions of Australia (that’s a vacation I have yet to take), but your analysis of how the prices change in different regions — especially when the grocery outlet is closer to home base — is very interesting.

Another solid performance yet again Mule. Your analysis is interesting and overall it highlights to me how competitve grocery pricing is across different regions. Naturally, one should expect to pay more for their basket where substantial freight costs are incurred to transport goods to regional and remote areas. And, the competition between the two ‘majors’ appears to be quite robust.

So, the obvious conclusion from the analysis is why are taxpayers being made to stump up to support yet another dubious (FuelWATCH) Governement sponsored initiative like this? The ACCC’s recent inquiry into grocery pricing has recommended changes that are likely to lead to even greater competition within the sector. For example, changing zoning laws to allow food retailers to operate in previously zoned non-food areas and removing various clauses in leases between supermarkets and shopping centres that prevent or delay the entry of other supermarkets. Now that’s what I’d call measurable and meaningful progress. If the Governement was actually serious about increasing competition in the grocery sector they would have done so long before now and they’d be doing more than simply watching prices.

One can only be left with a sense that this yet another lowbrow, vote grabbing stunt dreamed up by a bored politician who has run out of ‘Big Ideas’. Or, maybe this is a Big Idea?

@Craig: what I didn’t mention here is the introduction of rules that will require groceries to be labelled with a standardised price by weight. I’m surprised this hasn’t been done long ago as it has been in place in the UK for at least 15 years. This simple initiative is likely to be fair more useful for consumers trying to make sensible price comparisons that the GroceryCHOICE site.

One question though, whiilst the basket approach can hide a multitude of sins, I wonder whether it remains the most relevant single statistic given more people on average fill a basket rather than seek to purchase a single good when shopping in the hell holes that are Australian supermarkets.

Which brings me on to the real issue. Frankly I don’t think that grocery prices are the problem, these are merely a symptom of yet another sector (e.g. hotels, bottleshops, chemists etc) in which intense lobbying by a few large operators has effectively killed the likelihood that small business can thrive and provide us with the variety and freshness we all crave (or do we?).
What bothers me much more is the inability of the administration to work out how we should live….in relation to fresh food. If you only want to buy tomatoes in Sydney, a few cents per kilo is not the issue. The real issue is accessability to fresh tomatoes without having to jump into your 4×4 and slug it through 9 sets of traffic lights to a norton st grocer underneath a westfield car park to buy tomatoes which have travelled 3xs round Australia.

What can your investigative skill do to uncover how we source our freshgoods vs other developed societies? Maybe Sydney isn’t so bad. Maybe I’m just imagining it.

My parents often regale me of their intrepid venture into Marrickville to the Holy Grail of Shopperdom, Aldi. I’ve probably heard them say they’ve saved 8c on a tin of baked beans or bought some cheap Tim Tam clones 50,000 times, but I nod like a good son, often forgetting myself and waking from my mini mightmare with them asking if there’s anything wrong with me, while forcibly trying to prise the sharp object from my white-knuckled hand. My dad, the bargain hunter that he is, also led us on a terrifying journey one Christmas Day, refusing to buy petrol above 73c (fair while ago now), never mind we were going to Parramatta, the servos were mostly closed, and the dial had almost snapped itself off, such was the downward pressure imparted on it from the free air overwhelmiong the 3 remaining molecules of petrol fumes in the tank. The point being, these Aldi Oldies can sniff out a bargain like a WA politician can sniff out…well, you get the idea.

So I say, just go on your own personal hajj to the Marrickville Mecca, volume at thin margins is their raison d’etre, after all. The nebulous nature of cross-region basket data opens itself to statistical misrepresentation like all survey-based data (which I think is the point), so it helps to have someone do the hard work like you did and break it down into some ‘clearer’ choices. Of course, my dad doesn’t need actual survy-based statistics, he has his own, just like 68.4% of all people.

I agree that the fuel and grocery watch ideas are populist, the expense of which probably denying the ABS of much needed data surveyors and analysts for more important pursuits (though maybe we can observe some sort of renegade CPI check with this data?). They weren’t going to be a success pre-election, and probably won’t be now. So it pains me to also have to agree with Craig, who sounds like he’d have a dancing John Howard on the dash board, but they really are a waste of money. I’d much rather my tax dollars be spent on something more meaningful, like HakwinsWatch, or BeyonceCHOICE (KerrChing??), but I’m not sure they’d listen to me. And I’m definitely positively truly madly deeply certain that they won’t listen to intelligent analysis like the above (post, not my rantings).

Telstra should set up AN “Idol-like” 55c min. call in to get a price on individual item. There are plenty of numbnuts out there who wouldn’t be able to leave the house without referring to it, probably repeatedly. Others will just go to Aldi. Where’s that fork……